How to purify 403b funds from employer?

So basically, I have had 403b accounts with two of my previous employers. I never contributed to any of these funds, and it was only my employers contribution that were invested in a retirement fund. For my employer from 2012-2016, I don’t have any knowledge of which retirement fund they contributed to, or how much interest those funds collected. Once, I started working again, I rolled over those funds, into the 403b account of my next employer from 2018-2023. I know that this employer contributed to the vanguard retirement fund 2055.

So at this time, since I have left my last position, I am trying to figure out how to purify the funds, so I can put them into a self directed IRA with my bank. My question is:

  1. Since I don’t know exactly how much interest these funds have collected, if I donate half of the funds to charity will the funds be considered purified?
  2. Is there a specific kind of charity I should donate to?
  3. In addition, my bank is offering a bonus if I start a self directed IRA with them. Would taking advantage of this bonus be haram?

Another question for the group: my previous employers contributed to the Vanguard Target Retirement Fund 2055 (VFFVX) for my 403b plan. I was not able to find this in the zoya fund screener on the app. What percentage of the fund is not permissible? What percentage of those gains would I need to purify?

Assalaamu Alykum! Welcome to the community.

Let’s go through your questions. TLDR; Ask your imam.

  1. I’m not sure. In the case of a specific matter of fiqh, I’d speak to a local imam about what we should be doing.
  2. Maybe look for a charity that accepts sadaqah? You can also double-check that with your imam.
  3. This is a really good question. I’d probably normally say it’s ok, but I’m slowly becoming more and more convinced that the entire banking system is Riba. Maybe ask your imam about this as well.

About VFFVX, we don’t have dated funds in our database, but we do have VSMPX, which composes about 53% of it. The rest of it is VGTSX, international funds, which is mostly unrated, and VTBIX and VTILX, both of which are bond funds, so completely uncompliant.

Thanks for your response. I ended up calling the two companies that housed the 403b to ask them how much was employer contribution vs. gains. I am going to keep the employer contribution, and donate the gains. Whatever I have left after Roth conversion taxes, and donation of gains, I will keep to start my own investments. Also, turns out the initial amount I will put in my IRA is not enough to qualify for the bonus from the bank, which works out well Alhamdulillah.

I don’t really know anything about investing. Whatever I have learned, has been through reading a few articles, and listening to a few YouTubers. So as I attempt to create a portfolio for my new Roth IRA, here is what I am thinking:

AMAGX - 60 percent
SPRE - 15 percent
SGOL - 5 percent
AMAPX - 20 percent

I would much appreciate any tips, advice, or suggestions as I begin my investing journey.

Jazakallahu Khair.

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You did the right thing by calling and figuring out how much of the money was capital. It’s mentioned in the blog post, but I didn’t mention it in my response. I’m glad you did it.

As for how you weigh your new portfolio, I’ve created a separate thread for you. Link below.